Service Charge Caps: Negotiation and Typical Levels

What service charge covers

Service charge is the tenant's contribution to the landlord's costs of running the building. Typical items:

• Building maintenance and compliance (L8, EICR, fire systems)
• Common-parts cleaning and lighting
• Lifts and escalators
• Security and reception
• Landscaping and exterior maintenance
• Managing agent fee (typically 10–15% of total)
• Insurance (sometimes separate)

Cap structures

1. Fixed cap

   Specified £/sqft annual maximum. Any over-spend landlord's loss. Most tenant-friendly.

2. RPI / CPI linked

   Baseline cap indexed to inflation. Typical London commercial structure.

3. Fair and reasonable

   No numerical cap; tenant relies on 'fair and reasonable' cost challenge mechanism. Weakest tenant position.

4. Uncapped

   Full landlord recovery. Rare but exists on full-repairing institutional leases.

Typical London service charge levels Q1 2026

Building grade	Service charge / sqft pa
Trophy / Grade A+	£12–£22
Grade A	£8–£14
Grade B	£5–£9
Period refurbished	£4–£8

What to exclude from service charge

Standard tenant-exclusions to negotiate:

• Capital expenditure (major plant replacement)
• Landlord voids (void service charge)
• Pre-existing defects remediation
• Landlord marketing costs (leasing agent fees)
• Legal and professional fees for tenant disputes
• Commercial rates on common parts

What we do

Service-charge-aligned maintenance reporting for managing agents. See Commercial Maintenance, Office Maintenance.

FAQs